Comments on: Comparing Vanguard’s LifeStrategy And Target Retirement Funds

By: ITinvestor

ITinvestor — Wed, 03 Jul 2019 12:09:30 +0000

In reply to Foxy. Thanks Foxy :-) It does seem like a lot of people take this mix and match approach.

By: Foxy

Foxy — Sun, 30 Jun 2019 16:15:23 +0000

Great comparison, IT Investor. I’ve found that LifeStrategy is a decent choice for lazy investors like myself. The emerging markets allocation is lower than my target one so I’ll usually top it up with FTSE emerging (VFEM) and Dev world ex-UK to lower the home bias.

Also, a fellow IT investor. Keep up the good work 😉

By: ITinvestor

ITinvestor — Sun, 30 Jun 2019 13:01:03 +0000

In reply to diy investor (uk).

Thanks for all the comments. Good to see plenty of folks have been kicking the tyres on these funds.

@diy investor (uk)… 15% sounds like a reasonable number to me. It’s about three times the natural weighting, but close enough I think for UK-based investors. I wasn’t aware it had started as high as 33%, though. I think it would be useful if Vanguard laid out its plans here a little more publicly on its website, even if it was vague targets/timeframe that it said were not set in stone. I know there was some commentary in that Telegraph piece you tweeted recently, but that’s pretty much the only time I have seen this discussed (I haven’t been following these funds closely, so maybe it has been covered and just haven’t seen it). And +1 for more environmentally friendly options obviously.

@CisforV… I haven’t seen that particular research but I would guess it might confuse things a little if there were a variety of Target Retirement funds with different glidepaths. I suspect that if Vanguard see demand for advisers and investors for that sort of thing, though, they may well respond to it.

@Chris… That’s certainly possible. It definitely struck me as odd that the situation in the US was so different. I’m not sure of the history there — maybe the TR funds were launched first.

@Andrew… that is interesting. Thanks for pointing that out. https://www.vanguardinvestor.co.uk/investments/vanguard-global-aggregate-bond-ucits-etf-gbp-hedged-distributing

@Colin… I’m surprised it’s daily, but I guess as Vanguard is merely altering the allocations between its own funds, that means the trading costs of rebalancing that frequently are minimised.

By: Colin Payne

Colin Payne — Sat, 29 Jun 2019 19:00:58 +0000

I recollect reading that Life Strategy rebalances daily.
The yield is low on these funds, because an element of the income is reinvested, within (some)underlying accumulation units, in the fund, regardless of whether you hold income or accumulation units. ( I phoned Vanguard to verify this)

By: Chris

Chris — Sat, 29 Jun 2019 12:41:12 +0000

The retirement funds may not be popular due to the same phenomenon noted in another article in FT this week. The phased approach to retirement rather than a fixed date. Perhaps the product is not in tune with the market.

I hold 60/40 LS in an ISA and I am happy with that decision.

By: Andrew Seib

Andrew Seib — Sat, 29 Jun 2019 12:18:59 +0000

For ETF users: you may like to know that the Vanguard Global Bond Index £ hedged is now available, code VAGP. It distrubtes monthly and has an OCF of .1%

By: Malcolm

Malcolm — Sat, 29 Jun 2019 10:13:01 +0000

Info only-Vanguard Global Bond Index Fund hedged to the Pound has produced 5%pa return over the last 10 years
Figures from Vanguard web site
xxd09

By: CisforV

CisforV — Sat, 29 Jun 2019 08:31:51 +0000

It’s a shame the Vanguard target retirement date funds don’t provide a gradual rising equity glide path sometime after the retirement date. Recent research has shown this can be effective at combating sequence of return risk.

One reason could be that until relatively recently, common practice was to simply purchase an annuity upon retirement, whereas now people are looking at drawdown (obviously the FI community have been looking at safe withdrawals for some time).

By: diy investor (uk)

diy investor (uk) — Thu, 27 Jun 2019 13:27:00 +0000

Thanks for the comparison IT.

I hear Vanguard UK are actively looking to reduce the weighting to UK A/Share Index and I would hope for something nearer to 15% rather than 25%. I think it was 33% when launched in 2011.

I have been pleased with the performance of Lyxor Green Bond ETF since purchase in February…early days. I have asked Vanguard to offer a Green Bond option for UK investors. They say they will look into it.